This document discusses preparing clients for exiting their business. It outlines various exit options such as a partial or full sale, management buyout, or ESOP. It emphasizes the importance of determining financial and personal goals, having audited financials, management redundancy, and systems in place to minimize buyer risk. It notes the cost of no exit plan can be lower value, more stress, and fewer options. Examples show how proper planning can maximize value through proven earnings and synergies with potential buyers. The role of an investment bank, tax advisor, attorney and other professionals is outlined to run an efficient sale process.

1. PREPARING YOUR
CLIENTS FOR THEIR
EXIT
Matt Register
Principal

2. Legal Notice
• This is not an offer to sell or a solicitation of an offer
to buy securities.
• Securities are offered through Corporate Finance
Securities, Inc.
• Corporate Finance Securities, Inc. is a member firm
of FINRA and SIPC.

3. What are their options?
Not selling
Selling
0% sale
100% sale

4. What are their options?
Partial Management
Sale Buyout
Not selling
Selling
0% sale
100% sale
Minority Joint
Recap Venture ESOP

5. What is success?
• Full retirement?
• Continued consulting?
• Continue to run the business?
• Transfer to the next generation?

6. Future Funding Needs
Charity Family
Future
Lifestyle Business
Opportunities
Wealth

7. WHAT IS THEIR
NUMBER?

8. Who would buy their company?
Strategic Financial
• Usually not looking for partners • Looking for return
• Your business solves a problem • Not interested in running a
• Different math business
• Needs management team in
place

9. WHAT DO THEY
REALLY CARE ABOUT?

10. Maximizing Value
• Well document deal
• Proven earnings
• Replicable results
• Growth potential / Scalability
• Synergies
• Minimize buyer risk

11. Minimize Buyer Risk
• Audited financials
• Provable
• Manage for taxes, but prove earnings
• Bench strength
• Redundancy
• Sustainability
• Systems in place
• Less reliance on personality
• More systems

12. Pre-transaction Planning
• Legal
• Trusts
• Non-profits
• Gifts
• Wealth Management
• Determining your number
• Strategic
• Right business
• Right clients
• HR
• Knowledge management
• Depth of leadership

13. The Cost of No Plan
• Value of business
• Risk to buyer
• Stress for family
• Uncertainty for customers
• Uncertainty for employees
• Uncertainty for vendors
• Fewer options / Less control

14. Example 1
Company A Company B
• Contract Machining • Contract Machining
• OEM Drilling equipment • OEM Drilling equipment
• $16MM rev • $5MM rev
• Proven earnings • Run on a “yellow legal
• Management Team pad”
• Synergies with buyer • Customer
concentration
• No plan
• No team
• No time

15. Example 1
Company A Company B
• 5 X EBITDA • 3 X EBITDA

16. Example 2
• $35MM in revenue
• Out of favor industry
• Non-standard business model
• Very profitable
• Limited interest from buyers

17. Example 3
• $35MM rev
• Well run / depth / systems
• Solved a buyer problem

18. Example 3
• 5.5 X EBITDA

19. Example 4
• $30MM rev
• Son is victim of own success
• Asset light company

20. Example 4
• Minority recap
• Father retains some equity
• Son gifted equity
• Son earns equity from PEG
Father
25%
PEG Son
45% 30%
Company

21. Your Transaction Team
• Investment Bank
• Run an efficient auction
• Generate interest
• Negotiation
• Tax Accountant
• Attorney
• Reps and warrantees
• Contracts
• Insurance
• Legacy liability coverage
• Wealth Manager
• Make money with money

22. THANK YOU
Matt Register
mregister@cfaw-houston.com
713.302.3240